Next year’s Englewood budget predicts a $1.2 million shortfall, but that may not lead to a reduction in services, officials said.

The shortfall is the result of expenditures outpacing revenues, despite a predicted 2½ percent rise in revenue that Mayor Randy Penn said is very conservative. It’s because the city’s budgets are conservative that the shortfall may not be as bad as it sounds, Penn said. He said over the past five years, expenditures have not gone up much but city employees have received a 2½ percent raise.

The city’s total predicted revenues for next year are $40,818,932, with projected expenditures coming in at $42,023,476.

Frank Gryglewicz, director of finance and administrative services, said some of the expenditures are due to rising pension and health insurance costs.

“We have to keep them under control and try to come back, and most departments are going to come under budget for 2013 and that will carry forward as reserves to ease some of our budget woes,” Penn said.

Gryglewicz said getting greater revenues is difficult because Englewood is landlocked, so there’s just not much new retail or commercial development. He also said sales tax revenue is hard to predict.

Possible ways to ease the shortfall include dipping into reserves, which are predicted to be at 12 percent next year; raising property taxes, which Penn said is very doubtful; or delaying hiring and splitting duties with positions. While Gryglewicz said the public would likely not see a reduction in services next year, they could in 2015 if things don’t change.

Penn said the city has cut 155 positions since 2005. He said if the economy doesn’t improve, city council will take action in the spring.

“This is a guide for the whole (year),” Penn said. “It isn’t the final thing, it’s not solid in stone, so if we find we are way overbudgeting for expenditures we’ll have to cut back, and if we underestimate our retail sales that’s a bonus for us.”

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